60698 – Netflix customers in Australia could soon be facing steeper

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in soon be monthly charges.The popular streaming service on Monday confirmed that it recently tested higher subscription pricesfor new customers in Australia. The —which has nearly 100 million global subscribers andexpanded to Australia in 2015—has reportedly tested raising prices for new subscribers by as muchas three Australian dollars (AU).Netflix’s test resulted in some Australian customers seeing price increases for the streaming service’sBasic plan (going from AU$8.99 to AU$9.99 per month), while Netflix’s Standard plan increased AU$2to AU$13.99 and the Premium plan increased AU$3 to AU$17.99 per month, according to TheAustralian.Netflix confirmed the tests, but emphasized that it has not yet formally announced any permanentprice increases. “We continuously test new things at Netflix and these tests typically vary in length oftime,” the company said in a statement. “In this case, we are testing slightly different price points tobetter how consumers value Netflix. Not everyone will see this test and we may not everoffer it generally.”Your task: why you think Netflix conducted this test and what you think they found from thattest based on their later decisions.Refer in particular to concepts from the Week 3 lecture topic, such as what price elasticity of demandis and how it is calculated and used, its relationship with revenue, and relevant determinants of priceelasticity of demand._____________________

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